Use of the Internet by the general public is certainly gaining popularity. More and more people are getting access to the Internet and the vast amount of information that it provides. Along with the rapid increase in the number of Internet users, advertising on the Internet has consequently become an important priority for many advertisers.
As a result, for web portals and ISPs, a significant amount of revenue can be generated from displaying advertisers' ad banners on displayed websites or web pages. For example, for a preeminent portal such as Yahoo! which is visited daily by millions of users, considerable revenue can be made by displaying an advertiser's ad impressions on its websites or web pages.
As with any other revenue-generating endeavor, the goal of selling ad impressions on websites or web pages is to maximize the total ad revenue as much as possible. Hence, it would be desirable to provide a system and method that is capable of optimizing the chargeable ad rates so as to generate the maximum amount of ad revenue amongst existing advertising inventory.
Generally, the advertisers pay a fee for each ad viewed by web users. Contracts to show ad impressions are normally signed several weeks/months before ad impressions get delivered. The duration of contracts ranges from one day to multiple years. Typically, there are several types of contracts, including regular contracts, exclusive contracts and infinite contracts. For regular contracts, the advertisers purchase a designated number of ad views on a chosen space (web page). For exclusive contracts, they purchase all the ad views on a chosen space. For infinite contracts, they purchase all the leftover ad views on a chosen space after other regular contracts related to that space have been fulfilled.
These several types of contracts are generally priced at different rates. Even within the same type of contract, rates usually vary depending on a number of factors including, for example, ad showing times, location of ad impressions, advertisers' demand, etc. This type of rate or pricing structure, i.e., having different rates for the same commodity, is commonly known as differential pricing. Typically, these ad rates are predetermined based on market research and they generally do not vary within a particular sale period until the updated ad rates are published.
Furthermore, while ad rates are regularly provided to the salespersons, the quantity of ads that ideally should be sold under each rate is not usually provided, leaving the quantity of ads sold mostly up to the discretion of the salespersons. The lack of management relating to the quantity of ads to be sold under different rates contributes to under-optimization of total ad revenue. This is because it is difficult for a salesperson to predict how much more of the higher priced ads he can sell before the last possible sale date. If he reserves a large block of ads for a higher rate and that block is not sold out, then revenue is lost on those unsold ads which might otherwise have been sold at a lower rate. In the other case, if he allocates only a small block of ads for the higher rate and demand for such ads exceeds the small allocation, then revenue is similarly lost on those unmet demand since such demand might have been satisfied if he had allocated a larger block. Hence, it is important to monitor and manage the advertising inventory appropriately. It would be desirable to provide a method and system that is capable of managing advertising inventory so as to maximize total ad revenue.
Moreover, under customary ad sales practice, ad rates are provided to the salespersons as guidelines only and the salespersons have a large degree of flexibility to use these ad rates as they fit. Without any kind of effective monitoring or management of the existing advertising inventory, the total ad revenue is often not optimized. This under-optimization can be attributed to a number of reasons. For example, in the case where a salesperson has a considerable amount of discretion to charge different ad rates, the salesperson might be more interested in selling out his assigned allotment of ads instead of maximizing the total ad revenue. In other words, instead of trying to sell the ads at a higher rate, a salesperson may be content with simply selling his ads at a much lower rate for reasons such as pleasing particular customers or satisfying his sales quota. Hence, the goal of maximizing sales does not always coincide with the goal of maximizing total revenue. Thus, it would be desirable to provide a system and method that is capable of setting and controlling quantity of ads to be sold so as to maximize total ad revenue.
By way of background, FIG. 1 shows a simplified schematic diagram illustrating a typical system for delivering ads to web pages for viewing by a user. This typical system includes a webserver 10, an ad server 12, and an ad delivery schedule 14. The ad delivery schedule 14 is provided to the ad server 12 on a regular basis. The ad delivery schedule 14 generally includes a variety of information such as ads that are scheduled to be shown, display locations of these ads, duration of display, etc. Upon a user 16 clicking on a hyperlink or otherwise entering the url directly for a desired web page, the webserver 10 checks the ad spaces that need to be filled in for that desired web page and then requests the needed ads from the ad server 12. The ad server 12 subsequently serves the needed ads to the webserver 10 based on the ad delivery schedule 14. Upon receiving the needed ads, the webserver 10 incorporates these ads into the desired web page so as to allow them to be displayed to the user 16.